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February 23, 2006

WISTAX on State Budget Spending & Structural Deficit


A Medicaid shortfall, recently estimated at $76.7 million, is also a problem. "Reporting a Medicaid Trust Fund deficit separate from the general-fund budget and then claiming the general fund is in balance is akin to a shell game," WISTAX President Todd A. Berry noted. Medicaid is a joint state-federal program that provides health care to low-income individuals and families.

If any of these items were properly addressed in the budget enacted last summer, the WISTAX report concludes, the general fund would have a deficit. WISTAX is a nonprofit, nonpartisan organization dedicated to public-policy research and citizen education.

Another feature of the 2005-07 budget that gave WISTAX researchers pause was the transfer of monies from special-purpose funds to the general fund. Although the most publicized is a $430 million transfer—accomplished by executive veto—from the transportation fund to the general fund in order to pay increased school aids, the Legislative Fiscal Bureau identified a total of $647.9 million being "used for purposes other than those for which the fund was generally established."

• The state is slated to spend, from all sources (excluding bond proceeds), $52.7 billion over the next two years, of which $26.1 billion (49.5%) is from general purpose revenues (GPR)—mainly state taxes deposited in the general fund. Federal revenues account for another 25.6%.

• Individual income taxes alone account for 51.7% of general fund revenues. Combined with corporate income and sales taxes, the "big three" represent 92.1% of GPR revenues.

• Education dominates GPR spending during 2005-07, accounting for 50.4% of the total. Human services is second at 28.2%.

• In terms of who benefits from the GPR budget, various local governments and school districts lead the list, the beneficiaries of 56.7% of biennial expenditures. Aids to various individuals and organizations is a distant second at 19.7%. Shares devoted to running state government (16.3%) and the University of Wisconsin (7.3%) trail. School aids and tax credits alone represent 43.3% of the GPR total.

Posted by Jim Zellmer at February 23, 2006 4:54 PM
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